INTERIM REPORT 2021 Contents
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Leader Education Limited (Incorporated in the Cayman Islands with limited liability) Stock Code:1449 立德教育有限公司 2021 Interim Report 中期報告 INTERIM REPORT 2021 Contents 2 Corporate Information 4 Financial Highlights 5 Management Discussion and Analysis 15 Other Information 22 Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 24 Interim Condensed Consolidated Statement of Financial Position 26 Interim Condensed Consolidated Statement of Changes in Equity 27 Interim Condensed Consolidated Statement of Cash Flows 29 Notes to the Interim Condensed Consolidated Financial Information 50 Definitions CORPORATE INFORMATION BOARD OF DIRECTORS REMUNERATION COMMITTEE Executive Directors Mr. Zhang Su (Chairman) Mr. Liu Laixiang (Chairman and Chief Executive Officer) Mr. Liu Laixiang Ms. Dong Ling Mr. Cao Shaoshan Mr. Wang Yunfu Mr. Che Wenge NOMINATION COMMITTEE Independent Non-Executive Directors Mr. Liu Laixiang (Chairman) Mr. Zhang Su Mr. Zhang Su Mr. Cao Shaoshan Mr. Cao Shaoshan Mr. Chan Ngai Fan REGISTERED OFFICE AUTHORISED REPRESENTATIVES Cricket Square Mr. Liu Laixiang Hutchins Drive Mr. Chang Eric Jackson PO Box 2681 Grand Cayman, KY1-1111 COMPANY SECRETARY Cayman Islands Mr. Chang Eric Jackson HEAD OFFICE IN PRC AUDIT COMMITTEE Qunying Jie No. 33, Xueyuan Road Limin Development Zone Mr. Chan Ngai Fan (Chairman) Harbin City Mr. Zhang Su Heilongjiang Province Mr. Cao Shaoshan PRC PRINCIPAL PLACE OF BUSINESS IN HONG KONG Unit 26, 14/F., Solo Building 41-43 Carnarvon Road Tsimshatsui Kowloon, Hong Kong 02 LEADER EDUCATION LIMITED 2021 INTERIM REPORT CORPORATE INFORMATION AUDITOR PRINCIPAL BANKERS Ernst & Young Industrial and Commercial Bank of China Certified Public Accountants (Harbin City, Jingyu Branch) Registered Public Interest Entity Auditor No.41, Bei Shi Liu Dao Jie 22/F CITIC Tower, 1 Tim Mei Avenue Daowai District Central, Hong Kong Harbin City Heilongjiang Province LEGAL ADVISORS AS TO HONG KONG LAW PRC Morgan, Lewis & Bockius Harbin Bank Co., Ltd. (Songbei Branch) No. 500, Shimao Da Dao CAYMAN ISLANDS SHARE REGISTRAR AND Songbei District TRANSFER OFFICE Harbin City, Heilongjiang Province, PRC Conyers Trust Company (Cayman) Limited Cricket Square, Hutchins Drive, PO Box 2681 STOCK CODE Grand Cayman, KY1-1111 Cayman Islands 1449 HONG KONG BRANCH SHARE REGISTRAR COMPANY WEBSITE AND TRANSFER OFFICE www.leader-education.cn Tricor Investor Services Limited Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong LEADER EDUCATION LIMITED 2021 INTERIM REPORT 03 FINANCIAL HIGHLIGHTS Six months ended Six months ended Percentage 28 February 2021 29 February 2020 change RMB’000 RMB’000 Revenue 97,943 89,146 +9.9% Gross profit 48,714 49,485 –1.6% Profit before tax from continuing operations 30,530 30,510 – Profit for the period 30,530 29,033 +5.2% For the six months ended 28 February 2021 (the “Period”), our total revenue amounted to approximately RMB97.9 million, representing an increase of approximately 9.9% as compared with the six months ended 29 February 2020. Our profit for the six months ended 28 February 2021 amounted to approximately RMB30.5 million, representing an increase of approximately 5.2% as compared with the six months ended 29 February 2020. As at 28 February 2021, we had a total of 9,554 full-time students, representing an increase of approximately 8.5% as compared with the number of students enrolled in the school year 2019/2020; and our average tuition fees for our undergraduate college programs increased by approximately 7.5% for the six months ended 28 February 2021, as compared with the six months ended 29 February 2020. 04 LEADER EDUCATION LIMITED 2021 INTERIM REPORT MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL REVIEW Revenue The Group derives its revenue from the tuition fees and boarding fees that the Group collects from its students. Revenue increased by RMB8.8 million or 9.9% from RMB89.1 million for the six months ended 29 February 2020 to RMB97.9 million for the six months ended 28 February 2021. The increase was mainly due to the following reasons: (i) revenue from tuition fees has increased by RMB7.0 million or 8.5% from RMB82.8 million for the six months ended 29 February 2020 to RMB89.8 million for the six months ended 28 February 2021; and (ii) revenue from boarding fees has increased by RMB1.8 million or 28.1% from RMB6.3 million for the six months ended 29 February 2020 to RMB8.1 million for the six months ended 28 February 2021. For the 2020/21 school year, the tuition fee standards are RMB20,000 per year for general majors and RMB22,000 per year for art majors, respectively (2019/20 school year: RMB19,000 and RMB20,000, respectively). The new tuition fee standards are only applicable for new students admitted for 2020/21 school year and other students are subject to the tuition fee standards then applicable at their year of admission. The boarding fee rate for the 2020/21 school year is in the range of RMB2,000 to RMB2,200 per year (2019/20 school years: RMB1,600 to RMB1,800 per year). The total number of students enrolled has increased from 8,807 for the 2019/20 school year to 9,554 for the 2020/21 school year. Cost of Sales Cost of sales primarily consists of remunerations and benefits of our employees, depreciation and amortisation, heating costs, training expenses, maintenance costs, teaching expenses and utilities, as well as property management cost, cleaning and greenery fees, travel expenses, office expenses, student activity costs and others. Cost of sales increased by RMB9.6 million or 24.1% from RMB39.7 million for the six months ended 29 February 2020 to RMB49.2 million for the six months ended 28 February 2021. The increase was mainly due to: (i) staff costs increased by RMB4.1 million or 24.1% from RMB17.1 million for the six months ended 29 February 2020 to RMB21.2 million for the six months ended 28 February 2021, mainly due to the combined effects of the increase in remuneration and benefits payable to the teachers of the Group as well as the increase in the number of teachers; (ii) increase in teaching expenses of RMB1.5 million related to the cooperation with to Phoenix Digital Media (Beijing) Education Technology Co., Ltd.* (鳳凰數媒(北京)教育科技有限公司) and the service fee for Rain Classroom (雨課 堂) deployment of RMB0.6 million; (iii) training expenses increased by RMB0.9 million, mainly due to the increase in number of teachers and more training were conducted to enhance our teaching quality; and (iv) a service fee of RMB1 million for college students’ entrepreneurship guidance and practice base occurred in the period, and there was no such expenditure in the previous corresponding period. LEADER EDUCATION LIMITED 2021 INTERIM REPORT 05 MANAGEMENT DISCUSSION AND ANALYSIS Gross Profits and Gross Profits Margin Gross profits margin represents the percentage of gross profits to the revenue of the Group. Gross profits decreased by RMB0.8 million or 1.6% from RMB49.5 million for the six months ended 29 February 2020 to RMB48.7 million for the six months ended 28 February 2021, mainly due to fact that the growth of revenue was lower than that of corresponding cost despite the increase in revenue in line with the increase in average tuition fees. Gross profits margin has decreased from 55.5% for the six months ended 29 February 2020 to 49.7% for the six months ended 28 February 2021. The increase in the student number led to a corresponding increase in teaching expenses and remunerations and salaries of teaching staff. Furthermore, with a view to enhancing our teaching quality continuously, our Group incurred expenses for sending teachers to participate in training, expenses in relation to the establishment of Phoenix Academy through cooperation with Phoenix Digital Media (Beijing) Education Technology Co., Ltd.* (鳳凰數媒(北京)教育科技有限公司), and expenses for establishing the broadcasting and television program production and visual communication design majors, etc.. The combined effects of the abovementioned factors led to the decrease in gross profits margin. Other Income and Gains Other income and gains consist primarily of bank interest income, rental income, and government grants. With respect to other income and gains, the amount for the six months ended 28 February 2021 increased by RMB0.3 million as compared to the amount for six months ended 29 February 2020 which mainly was due to sponsorship fee of RMB0.2 million received from Kunshan local government due to Excellent College Award obtained from the Kunshan Municipal School-Enterprise Cooperation Annual Meeting. Selling Expenses Selling expenses primarily consist of promotion expenses and admission expenses of different disciplines and the remunerations of personnel of our admission office. The selling expenses increased by RMB0.5 million or 92.6% from RMB0.6 million for the six months ended 29 February 2020 to RMB1.1 million for the six months ended 28 February 2021, which was to due to the combined effects of (i) the increase in number of enrolled students; (ii) the intensification of enrollment publicity and increase in investment; and (iii) technical service fees and employment practice cooperation fees in relation to graduates’ employment quality survey of RMB0.2 million in total incurred for the period which with assist student enrollment in the future. 06 LEADER EDUCATION LIMITED 2021 INTERIM REPORT MANAGEMENT DISCUSSION AND ANALYSIS Administrative Expenses Administrative expenses consist of administrative staff’s salaries costs, depreciation and amortisation, consultation fee, travel expenses incurred by our administrative staff for business trips and for running errands, heating costs, entertainment costs and others. Listing expenses recognised for the six months ended 29 February 2020 was RMB13.1 million, while no such expenses were incurred for the six months ended 28 February 2021.